Published October 12, 2009
After a summer of setbacks on health care reform, Democrats on Capitol Hill again seem to think they have found a formula for success. The latest iteration of Obamacare, emerging this week from the Senate Finance Committee, is said to be a move to the center, avoiding the albatross of a government insurance option and costing “only” $900 billion.
But the bill, shepherded through a series of narrow party-line committee votes by chairman Max Baucus, is far from a compromise measure. It is a massively ambitious, costly, intrusive, inefficient, and clumsy combination of mandates, taxes, subsidies, regulations, and new government programs intended over time to replace the American health insurance industry with an enormous new government entitlement. And it fails to address what even President Obama has said is the core of our health care dilemma: rising costs. Indeed, there is every reason to believe that the Baucus bill would actually increase the cost of health insurance premiums.
By requiring insurers to cover all comers on the same terms and that the healthy and the sick pay the same amount for their coverage, the bill would raise costs for many of those who are now insured. The requirement that all Americans buy insurance approved by the government or pay a hefty fine, moreover, would create new captive customers for coverage and constrain the range of options available to them — a recipe for higher prices. It would also shift some costs from older to younger people, encouraging (and in many cases requiring) everyone to buy more comprehensive policies than they might otherwise want and eliminating many of the low-cost catastrophic care plans popular with younger Americans. Insurance will be more expensive, which in turn will depress wages since the cost of insurance will continue to come out of many Americans' take-home pay.
The bill would also create a new tax on hiring in the form of the employer coverage mandate, and this and the variety of other new taxes and penalties on insurers, drug makers, and health care providers would be passed right along to consumers. It would also make a mockery of President Obama's pledge not to raise middle class taxes.
Along with new taxes, the bill seeks to offset its enormous increases in government spending by squeezing Medicare, and particularly the Medicare Advantage program that millions of seniors use to get extra coverage through private insurers. But rather than use cuts in Medicare to shore up that program's ailing finances and help make it sustainable, the Baucus bill (like other Democratic plans this year) would use the money to create yet another unsustainable entitlement.
The bill would therefore exacerbate the chief causes of the rising costs at the core of our health care woes: inefficient entitlement spending and the absence of real market pressures in health insurance. Instead of addressing these, Baucus is offering tax increases, a new entitlement sure to grow more costly every year, fewer options for doctors and patients, a far greater government role in health care, and the prospect of health care service shortages, disruptions, and rationing.
And just what are all these costs and burdens for? The Baucus bill, like other versions of Obamacare, promises to increase the portion of Americans who have health insurance from 83 percent to 95 percent. Is there really no other way to move in this direction than to abandon a health care system that offers the vast majority of Americans care they are happy with and create a sprawling new federal fiasco?
Republicans have offered some better options, but given the balance of power in Washington, their most important task for now is to prevent the enactment of the profoundly misguided plans pursued by the Democratic majority. Voters have come to understand many of the grave problems with Obamacare in recent months. They should be helped to see that the Baucus version is no different. It would increase the cost of premiums for younger Americans, reduce Medicare benefits for older Americans, undermine the quality of everyone's care, and cost us all dearly.
Yuval Levin is Hertog Fellow at the Ethics and Public Policy Center in Washington, D.C.